Buying a home is often the biggest financial decision you’ll ever make.

It’s not just about choosing a place to live; it’s about making a long-term investment that will impact your financial future for years to come.

Therefore, if you are looking to buy a home, there are certain steps you should take to prepare for the purchase, according to several advisors ranked in CNBC’s 2024 Financial Advisor 100 List.

“Number one is doing that initial homework and financial planning,” said Brian Brady, vice president at Obermeyer Wood Investment Counsel in Aspen, Colorado. The firm ranks No. 23 on the 2024 CNBC FA 100 list. 

Most important, it has to be a “smart financial decision” that makes the most sense for you, explained Stephen Cohn, co-founder and co-president of Sage Financial Group in West Conshohocken, Pennsylvania. The firm ranks No. 61 on the 2024 CNBC FA 100 list.

“I run into a lot of first-time homebuyers, friends, kids, acquaintances. They fall in love with the house, and it may not make sense for them financially,” said Ron Brock, managing director and chief financial officer at Sheaff Brock Investment Advisors in Indianapolis, Indiana. The firm ranks No. 7 on the 2024 CNBC FA 100 list.

He tells them: “Just be smart. Don’t be house poor.”

Here are some key steps to consider if you plan to buy a home:

Make sure you have strong credit, said Shaun Williams, private wealth advisor and partner at Paragon Capital Management in Denver, Colorado. The firm ranks No. 38 on the 2024 CNBC FA 100 list. 

“The higher the credit score, the better the terms you’re going to get on the loan, and the lower the interest rate will be,” said Ryan D. Dennehy, a financial advisor at California Financial Advisors in San Ramon, California. The firm ranks No. 13 on the 2024 CNBC FA 100 list. 

For example, a FICO score ranging 760 to 850 might qualify for a 6.226% annual percentage rate, according to Bankate.com. That can translate to a $1,842 monthly payment, Bankrate found.

On the other hand, a FICO score of 620-639 might get a 7.815% APR, roughly amounting to a $2,163 monthly mortgage payment, per Bankrate examples. They are based on national averages for a 30-year fixed mortgage loan of $300,000.

You can start the process by paying down any existing debts that you have on time and in full, and avoid new loans as you get closer to buying a home, experts say.

While a 20% down payment is not required to buy a house, buyers try to put more money upfront to avoid mortgage insurance costs and potentially lower monthly payments.

In the third quarter of the year, the average down payment was 14.5%, and a median of $30,300, Realtor.com told CNBC.

In order to start saving for a down payment, you need to figure out your cash flow, or how much money is coming in versus going out every month, said Steven LaRosa, director and senior portfolio manager at Edgemoor Investment Advisors based in Bethesda, Maryland. The firm ranks No. 14 on the 2024 CNBC FA 100 list.

Also, try to maximize how much money you can save or put away towards the down payment, said LaRosa.

Home emergency spending was $1,667 across 1.5 projects per household in 2023, according to a report by Angi, an online marketplace for home improvement professionals.

Ask yourself what kind of lifestyle you look forward to, said Brady.

“Are you looking for a condo? Do you want a single-family home?” he said. 

Then you can focus on factors like location and price, said Brady. 

Meanwhile, some of the additional costs that come with owning a house are driven by where you live, like property taxes, utility and insurance costs, he said. 

In some areas, “it’s next to impossible” to get home insurance, said Brady. “And if you can [get home insurance] you’re paying quite a bit.“

Nearly three-quarters, or 70.3%, of Florida homeowners and 51% of California homeowners say they or the area they live in has been affected by rising home insurance costs or changes in coverage in the past year, according to Redfin, an online real estate brokerage firm.

To that point, the costs of homeownership adds up to an average $18,118 annually, or $1,510 a month, according to a report by Bankrate.com. The national figure includes the average costs of property taxes, homeowner’s insurance, and electricity, internet and cable bills. Maintenance was estimated at 2% a year of the home value.

“Those are very significant additions that sometimes people glance over and don’t put enough weight on,” said Cohn.

As such costs are unlikely to decline as time goes on, it’s important to have an emergency fund for homeownership costs, experts say.

The tax extension deadline has arrived and there are options if you still can’t pay your balance, tax experts say.

About 19 million U.S. taxpayers filed for an extension by the April 15 tax deadline, which bumped the filing due date to Oct. 15. But taxpayers affected by natural disasters may have even more time, with new deadlines ranging between Nov. 1 and as late as May 1, 2025, depending on location.

However, for federally declared disasters after April 15, filers were not granted more time to pay their tax bill. Penalties and interest on unpaid balances started accruing after the April 15 deadline.

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Many taxpayers wrongly assume that a tax extension provides more time to pay, experts say.

“That’s a surprise to a lot of people,” said Josh Youngblood, an enrolled agent and owner of The Youngblood Group, a Dallas-based tax firm. 

If you missed the tax deadline, the late payment penalty is 0.5% of your unpaid balance per month or partial month, capped at 25%. You will also incur interest on unpaid taxes.

By comparison, the failure-to-file penalty is 5% of unpaid taxes per month or partial month, up to 25%.

After filing, there are “various payment options” online, and many filers will receive an immediate acceptance or rejection of payment plan requests without calling the IRS, according to the agency.

“If you owe less than $50,000, establishing a payment plan with the IRS is almost going to be automatic,” O’Saben said.

IRS online payment plans, or “installment agreements,” include:

• Short-term payment plan: This may be an option if you owe less than $100,000, including tax, penalties and interest. You have up to 180 days to pay in full.
• Long-term payment plan: This may be available if your balance is less than $50,000, including tax, penalties and interest. You must pay monthly, and you have up to 72 months to pay off the balance.

Although the late-payment penalty and interest will continue to accrue, an IRS payment plan could cut your late-payment fee in half while the agreement is in effect, according to the IRS.

One downside of IRS payment plans is future tax refunds could be used to offset your unpaid balance, O’Saben said.

Many colleges are under financial pressure, and the cracks are starting to show.

At least 20 colleges closed in 2024, and more are set to shut down after the current academic year, according to the latest tally by Implan, an economic software and analysis company.

Altogether, more than 40 colleges have closed since 2020, according to a separate report by Best Colleges.

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As the sticker price at some private colleges nears six figures a year, students have increasingly opted for less expensive public schools or alternatives to a four-year degree altogether, such as trade programs or apprenticeships.

At the same time, the population of college-age students is also shrinking, a trend referred to as the “enrollment cliff.”

Experts have continuously warned that ongoing problems with the new Free Application for Federal Student Aid form have resulted in fewer students applying for financial aid, which could also contribute to declining enrollment.

That has left some colleges and universities in a bind, especially “small private — often liberal arts — schools,” said Candi Clouse, a vice president at Implan.

Meanwhile, the country’s most elite institutions are thriving.

Coming out of the pandemic, a small group of universities, including many in the Ivy League, experienced a record-breaking increase in applications, reports show.

Last year, Yale University, for example, accepted 3.73% of the record-high 57,465 students who applied to the Class of 2028.

Overall, the number of college applicants jumped 11% in the 2023-24 school year, even as enrollment flatlined, the latest data from the Common Application found, suggesting more students are applying to the same schools.

“There’s been a paradox in higher education for five-plus years,” said Hafeez Lakhani, founder and president of Lakhani Coaching in New York.

“At the very same time you have an enrollment crisis building, you have record application volume at the most selective schools,” he said. “The consensus is, it’s only worth going to college if it’s a life-changing college.”

Meanwhile, private colleges that are less prestigious but equally expensive are struggling to attract applicants, he added.

For a majority of students, “the costs are nowhere near reasonable,” Lakhani said.

“If you are not a big brand, you have a real problem on your hands,” he said.

College is becoming a path for only those with the means to pay for it, other reports show. 

Children from families in the top 1% are more than twice as likely to attend a so-called Ivy Plus school as those from middle-class families with comparable SAT or ACT scores, according to the National Bureau of Economic Research. 

Though opinions on which schools should be considered Ivy Plus vary, the group generally includes the eight private colleges that comprise the Ivy League — Brown, Columbia, Cornell, Dartmouth, Harvard, University of Pennsylvania, Princeton and Yale — plus the University of Chicago, Duke, Massachusetts Institute of Technology, and Stanford.

Most Americans still agree a college education is worthwhile when it comes to career goals and advancement. However, only half believe the economic benefits outweigh the costs, according to a separate report by Public Agenda, USA Today and Hidden Common Ground.

The rising cost of college and ballooning student loan balances have played a big role in changing views about the higher education system, which many think is rigged to benefit the wealthy, the report found. 

And costs are still rising.

Tuition and fees plus room and board for a four-year private college averaged $56,190 in the 2023-24 school year. At four-year, in-state public colleges, it was $24,030, according to the College Board, which tracks trends in college pricing and student aid.

Already, the majority of applicants hail from the wealthiest zip codes, the Common Application found.

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